Tariff Policy - Gatt and the cold war

Early in World War II, Anglo-American planners addressed tariffs,
especially the British imperial system of discrimination and
America's high duty rates. They agreed to negotiate down such
protection and include as many nations as possible in the exercise of
tariff liberalization. The planners thus launched bargaining talks in the
first round of the General Agreement on Tariffs and Trade (GATT) in 1947
between twenty-three nations, and simultaneously formulated a blueprint
for a trade organization, replete with rules and principles to guide
future commercial policies on tariffs as well as related issues such as
cartels, employment, and development. The organization itself never came
into existence because of a lack of political will power in the United
States (it would finally be born under the guise of the World Trade
Organization, or WTO, in 1995), but tariff negotiating rounds of GATT
continued into the 1990s, until the WTO absorbed GATT.

The first Geneva Round of GATT bogged down over imperial preferences, but
the State Department placed greater importance on British economic
problems than British intransigence in the negotiations. Maintaining free
world unity took precedence over reducing foreign tariffs, which might
undermine foreign recovery efforts and thus play into Soviet hands. This
was an era in which aid proved more effective than trade in addressing the
economic crises facing western Europe. Once the Marshall Plan period ended
in the early 1950s, however, GATT rounds gradually lowered tariffs to the
point that, by the early 1970s, industrial tariffs fell to minimal levels.
Tariffs dropped about 80 percent under the RTAA, providing a boon to
foreigners and many U.S. exporters, although the American merchandise
trade surplus dwindled away by the early 1970s. By that time, nontariff
forms of protection emerged as issues, and so it was difficult to separate
tariffs from other barriers.

Postwar U.S. tariff policy also succeeded in molding an anticommunist
alliance of solvent nations, bound together by integrated economies.
Although protectionism reared up periodically during the half century
after World War II, the battle over tariffs shifted to arguments over how
much tariff slashing would boost America's Cold War allies. The
State Department encouraged U.S. imports oftentimes more strenuously than
exports. This was particularly the case during the early Cold War, in
light of Japanese and western European recovery needs, but that approach
persisted for decades. Repeatedly, the Eisenhower administration turned
back protests from domestic producers for import restrictions on items
ranging from clothespins to lemons. The Kennedy, Johnson, and Nixon
administrations preferred side agreements, or special tariff hikes
designed to help certain politically powerful interest groups in Congress,
as they maintained an overall strategy of liberal trade for the
accomplishment of foreign policy goals. Richard Nixon and Congress,
however, restored the old emphasis on reciprocity abroad by adding
retaliatory authority into trade legislation, although under subsequent
presidents this amounted mostly to muscle flexing with lax enforcement
against foreign discrimination. And by this time, tariffs were little
involved; when protectionism against automobile imports became a cause
célèbre in the 1980s, for example, the backlash from
Congress and administrations came in the form of quotas and other
nontariff restraints.

Trade liberalization succeeded in its diplomatic objectives: strengthening
the alliance, integrating western Europe into a dynamic bloc of nations,
attaching Japan to the U.S. side, and luring Third World countries into
the free world fold. So successful was the RTAA that it had a large part
in fueling growth in the West to the point that the Soviet Union and its
satellites tried to compete but bankrupted themselves in the process,
thereby ending the Cold War.

At home, by the 1970s and into the next decade there were renewed calls
for tariff barriers. The ascendance of Japan in particular sparked
protectionism. The advent of the WTO, with its supranational powers over
global commerce, and the revolution of globalization spurred a loose
coalition of protective-minded groups, among them labor,
environmentalists, and populist politicians, to crusade at the turn of the
new century for barriers, including tariffs, that would enhance national
livelihoods. For example, labor sought restrictions on the ability of
corporations to shift production overseas, as well as safeguards for
fellow overseas workers. Environmentalists sought to impose U.S.
protections for the environment on other nations. One notable case was in
the type of nets used by foreign (Mexican) fishing interests; their nets
were not dolphin-safe, while U.S. nets were. Populists opposed
America's joining international organizations that supposedly
undermined U.S. national sovereignty, which was part of the
neo–Fortress America mentality, linked, for example, to Patrick
Buchanan's crusade against immigration from Mexico.

The days of the high protective tariff had long passed, but it remained to
be seen, after Cold War strictures had ended and America was released from
its obligation to provide foreigners with profits at U.S. expense, whether
reciprocity and protection for domestic producers would flourish anew. Yet
clearly, more than two centuries of history pointed to the possibility of
tariff and trade policy accounting for domestic needs, as it increasingly
met diplomatic imperatives along the way.